If you are more serious with embedded systems you probably are using JTAG debugger. If you decided to build an adapter, probably you should start looking for USB based JTAG adapter as COM ports are disappearing from computers.
This AVR JTAG interface uses specialized FT2232 chip with two independent channels where one is used for JTAG and another can be used for simple serial communication between target and PC. JTAG AVR adapter can run in two modes: The first mode allows run as independent software. There is support for connecting target via JTAG, read signature, reset target, download software (*.hex) into target and to manage target fuses (read, write); The second mode is AVRStudio mode. In this mode PC software interprets AVRStudio requests and communicate with target via JTAG. For AVRStudio it works as JTAGICEMK2 emulation.